As OPEC gathers, Saudis say oil supply ample

By Reuters
Posted Feb. 21 at 1:27 p.m.

World markets have plenty of oil, top exporter Saudi Arabia said Monday, as a wave of revolution that has toppled two presidents tightened its grip on OPEC member Libya and drove prices to a 2-1/2 year-high.

Energy ministers arrived in the Saudi capital Riyadh on the eve of talks designed to narrow the gap between producer and consumer nations.
The formal agenda could be overwhelmed by concern antigovernment protests will drive oil prices still higher.

Oil on Monday climbed above $106 as energy firms recalled international staff from Libya, and spreading unrest shut down some 100,000 barrels per day (bpd) of production there.

It was the first output disruption since popular unrest erupted in Tunisia, ousting its president, before spreading to Egypt, where it unseated Hosni Mubarak after 30 years.

Libyan leader Muammar Gaddafi’s four-decade-rule also appeared in jeopardy as protests reached the capital Tripoli.

Saudi Oil Minister Ali al-Naimi will open proceedings at the International Energy Forum with a speech on Tuesday, but declined to talk to reporters on Monday.

His deputy Prince Abdulaziz bin Salman Al-Saud told a news conference on Monday the market had plenty of oil.

“We’re much more focused on how the market balance is, is it sufficiently supplied? And the answer is ‘yes, abundantly,’ therefore does the situation warrant any kind of intervention? I don’t think so,” he said.

He also reiterated the long-held Saudi view $70-$80 was the fair price for oil.

“It is justified because it enables producers to invest; it is justified because it does not harm consumers.”

Though oil prices are well above those levels, OPEC ministers have repeatedly said the market has enough supply, and the Organization of the Petroleum Exporting Countries has no plans to meet formally to reassess output until June.

Iran, OPEC’s second largest oil producer after Saudi Arabia and holder of the rotating OPEC presidency, was among several oil ministers who will stay away from Tuesday’s talks, delegates said.

His anticipated absence was interpreted as another clue OPEC was not ready to react to rising oil prices with a formal output decision.

The group’s supply policy has been unchanged since December 2008, when it agreed a record output cut of 4.2 million barrels per day.

Initially, it implemented the policy agreement rigorously, but as the oil market has risen, OPEC members have increasingly produced above their output targets.

They are now delivering only around half the promised curbs.

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